State cash scheme for the poor under scrutiny

Economists have punched holes in a government plan to start a social welfare scheme for the poor, saying there were no measures in place to stop corruption in the disbursement of the monthly allowances.

Plans to disburse Sh1,500 every month to about 200,000 poor families will be tabled and debated by the cabinet in its next sitting following recommendations by a government task force formed in February to find the means of managing a food subsidy scheme for the poor.

The task force, under the office of the Prime Minister, recommended that Treasury allocates an initial Sh600 million for an eight-month pilot project to disburse Sh1,500 to 100,000 poor families living in Nairobi’s low income settlements of Mathare, Korogocho, Mukuru and Kibera slums.

Cash diversion

The government will then expand the programme to cover another 100,000 poor families in Kisumu and Mombasa next year.

“To give the poor cash instead of food is a good idea because it will give the beneficiaries some freedom to use the money to meet varied demands. Some people may not like to get maize flour every month, they may want to vary their menus,” says Prof Joseph Kieyah, an economist with the Kenya Institute for Public Policy and Analysis (Kippra).

But questions are now emerging over the successful management of the programme without safeguards to stop the money being diverted to the pockets of the rich.

“Who will manage this programme and how will they stop politicians from manipulating it by drawing their own list of the alleged poor families. Politicians can hijack this noble programme,” says Dr Tabitha Kiriti-Ng’ang’a, an economist and a lecturer at the University of Nairobi.

The new social welfare scheme to be known as Saidia Jamii could be Kenya’s first ever cash -based goodwill programme to assist the poor in Kenya.

Other programmes already being run by the government include the distribution of low cost maize flour in the low income settlements across Nairobi.

But even this programme is almost running into difficulties with revelations by the National Cereals and Produce Board that its stocks are dwindling.

The board has only 2.5 million bags of grains in its stores against 32 million bags required every year.

According to the government, there are about 10 million people who are food insecure and about Sh26 million is needed urgently to feed 3.8 million people classified as the most vulnerable.

It is because of this that the government taskforce has recommended that Sh600 million be immediately made available to allow for the Sh1,500 disbursement for every poor family in Nairobi in the test project that is planned to start in November.

The money—an economic lifeline for the poor— could also prevent hundreds of the targeted families from slipping into poverty as the economic contraction makes life harder for most people.

The rising urban inequality, according to analysts, is creating a huge underclass with serious consequences for the country’s security and social fabric as the struggle to survive has forced some of the most vulnerable people into crime and high-risk occupations such as prostitution.

The cash disbursement plan comes at a time when the global economic slowdown continues to make it difficult for families to afford basic necessities such as food and fares.

Economists say a combination of falling household income, rising prices and poor governance was making life miserable for the poor majority in Nairobi and other major towns and that this was creating a big pool of poor families and low class citizens.

But an economist, Dr Samuel Nyandemo, is also questioning the criteria to be used to identify the needy and the sustainability of the programme.

“We have not established the barometer for measuring the most vulnerable cases. How will the government establish who is poor or rich. The money allocated for this project could end up in the pockets of the undeserving,” says Dr Nyandemo who is also a lecturer at the University of Nairobi’s school of business.

“The people living in the slums are not necessarily poor. They could be rich back in their rural homes. The government is yet to carry out a comprehensive survey to identify poor pockets of the country,” says Dr Kiriti-Nga’ng’a.

There are also questions regarding the possibility of an increased budgetary expenditure and the tax burden that could be left on the working class.

“We are definitely likely to see an increase in the government budget,” says Dr Kiriti-Nganga “In any subsidy situation, it is always the working class that suffer as they will have to pay more taxes, the government would not want to borrow externally to fund this programme because it is intended to run for a long time”

Finance Minister Uhuru Kenyatta presented a Sh860 billion budget last June and analysts say this is likely to go up with the new government plans to give money directly to poor families.

Already Sh2 billion was allocated in the 2009/2010 budget for drought relief, out of which one billion shillings is to be used to develop a food subsidy scheme targeted at the vulnerable people.

The sustainability of the programme is also being questioned because it comes at a time when the Kenya Revenue Authority is reporting low tax collections.

KRA fell short of its July-September targets by Sh4 billion, having netted Sh128 billion.

This failure leaves the Government in a tighter financing position to fund the pilot project which requires Sh600 million for the next eight months.

“The MPs are not paying taxes, so you know very well that it is the common man who will fund this programme,” says Dr Kiriti-Nganga.

Plans for the country’s first ever cash based social welfare programme is modelled around successful schemes in Brazil, Chile, Ethiopia, Ghana and South Africa where the poor draw monthly subsistence allowances.

In the UK, the allowances commonly called dole money, is given to the unemployed but on condition that they continue searching the job market for employment.

People found to be lagging behind in the search for employment are removed from the programme.

Stimulus package

In the United States of America, the Congress recently passed the stimulus package that included a $3 billion emergency fund to provide temporary assistance to needy families.

Many low income Americans or poor families estimated to be around 37 million people benefit from the stimulus package passed by their Congress.

In the US, more than 30 million people benefit from food stamps, another subsidy arrangement meant to feed the very vulnerable.

About 4.8 million others draw unemployment allowances or disability allowances.

The cash disbursement programme for the poor in urban slums comes at a time when aid agencies such as Oxfam estimate that the number of people living in the low income settlements is increasing.

Oxfams report on Urban Poverty and Vulnerability in Kenya says Nairobi and other urban regions are sagging under the weight of an increasing population as most people troop to the urban regions in search of jobs and good living but this turns into a nightmare for many who end up in slums because of lower and unstable incomes.

According to the British aid agency, more than four million people living in Nairobi, Mombasa and Kisumu cities are so poor they are unable to afford food regularly and that almost a third of the people classified as “food poor” are located in Nairobi.

Prime Minister Raila Odinga says it is the government’s responsibility to provide a safety net for poor.